Step 1: Have a Plan for Selling Your Business

To start, you’ll need to create a plan for selling.  You’ll determine how much you’d like the business to sell for and conduct a full valuation to see if your business can reasonably command that price.  You’ll need to gather all your business data, including tax statements, business plans, strategies and training, and everything else that can be considered in the assets.

If that valuation concludes you can’t get the price you were hoping for if you sell now, your plan will include steps to increase the value of your business before you put it up for sale.

You’ll need to recast your financial statements since your tax documents are usually prepared to show the lowest profits possible.  While this is great for taxes, it is the worst strategy for convincing a Buyer that your business is worth buying.  Your company’s finances must be presented in a way that makes them appealing and accurate to buyers.

Finally, you’ll prepare an Executive Summary of your business and a Confidential Business Review.  Only then are you prepared to seek out potential buyers.

Step 2: Do a Search

If you don’t have a plan for finding qualified buyers, now’s the time to invent one.  You’ll need to track down buyers interested in your type of business, preferably those likely to have the financial means to invest.  You’ll distribute your Executive Summary to those buyers – so it needs to be very compelling since it’s the bait you’re dangling to hook your big fish.

Once a Buyer bites, you’ll need to qualify the Buyer to be sure he can afford your business.  You’ll also agree to send him your company’s Confidential Business Review after the Buyer signs an NDA or Confidentiality Agreement.  Make sure yours is iron-clad – or all your business secrets could disappear.

You’ll need to determine the Buyer’s interest, which can be difficult since buyers are often unsure about their level of interest while simultaneously considering other offers.  If you find a Buyer willing to move forward, it’s time to make a deal.

Step 3: Make a Deal

You’ll conduct an initial meeting with your Buyer and give them a tour of your business.  You must gauge the Buyer’s level of interest, particularly if you have other offers.  If you reject a second Buyer because you think this one will pay a higher price, you could lose out when the first Buyer bails at the last minute.

If you’re confident, you’ll motivate the Buyer to act by making a firm purchase offer.  You’ll then negotiate a price, and if successful, you’ll write up an LOI or Asset Purchase Agreement to seal the deal.

Step 4: Close the Deal

Once more, you’ll need to open due diligence.  Your Buyer may also need to apply for finance, if they need it, and obtain lender instructions.  You’ll open Escrow and start the Bulk Sale process.  If all the paperwork is filed correctly, every i is dotted, and every t is crossed, you’ll finally sign the final documents.